Two crucial snapshots of housing market activity will shed light on health of industry this week

The release of the latest mortgage approval data, due today, and Halifax’s house price survey for March, which is published on Friday, should provide a fresh insight into the health of the UK’s housing market. It follows a torrid time for housebuilders and related construction businesses amid soaring interest rates, rising costs and a slump in sales.

The downturn recently claimed the scalp of Aberdeen-headquartered Stewart Milne Group, which had been going for nearly 50 years, with the loss of 200 jobs. However, there have been some signs that the market may have turned a corner. In the past few weeks, Scottish housebuilder Springfield Properties joined larger rivals in reporting signs of increasing homebuyer confidence.

Mortgage approvals may have been boosted by the likelihood of interest rate cuts from the Bank of England in the coming months, and the attendant reductions in mortgage rates this should bring. The figures will cover the month of February and there will be two benchmarks - the 55,227 approvals recorded in January, which was the highest total since October 2022, and the 43,392 registered in February a year ago.

Analysts at investment firm AJ Bell noted: “From the perspective of the stock market, housebuilding companies will be watching these data releases with interest and so will estate agents, whether they are online-only portals such as Rightmove or longer-established players such as Savills and Foxtons.

“Rightmove’s shares are not that much higher than they were five years ago. Like many others, they plunged in early 2020, surged during a lockdown boom (stoked by stamp duty tax breaks and extension to Help to Buy) before a renewed cooling of the market in the face of higher interest and mortgage rates.

“It will be interesting to see if the possibility of interest rate cuts from the Bank of England this year, and the attendant reductions in mortgage rates this should bring, will provide a boost to demand. If so, the post-Trussonomics panic of January 2023 could prove to be the low, although housebuilders such as Persimmon, Taylor Wimpey and Bellway have generally flagged tentative improvements in sales per outlet per week and reservation rates.”

The latest monthly Halifax house price survey should also make for interesting reading, the analysts added. For February, the lending giant’s data showed a fifth straight increase in the average UK house price, to £291,699. That was a 1.7 per cent increase on a year earlier.

“Housebuilders have ridden a decade-long surge in house prices, but they have now stalled, and input costs have outstripped price increases, with the result that profits peaked for the quoted builders in 2018 (even allowing for the pandemic dip and then lockdown boom),” AJ Bell said. “The Office for National Statistics produces a slightly lower average figure, at £282,000, but either way, those numbers compare to an average UK salary including bonuses of £35,000. As such, the average house price represents around eight times the average salary.”

Analysis: the potential implications of Aberdeen-based housebuilding giant Stewart Milne falling to rubble